Fed to keep power post reform

AFTER heavy criticism of its handling of the financial crisis, the US Federal Reserve yesterday appeared likely to escape the most aggressive congressional scrutiny of its interest rate deliberations.

Lawmakers finalising a sweeping overhaul of financial regulations have indicated they may back away from a measure that would subject the US central bank’s monetary policy to scrutiny. They could also abandon a plan to make one of its top officials a political appointee.

Fed officials had opposed both measures as intrusions on the central bank’s political independence – a hallmark of the Fed’s operations in recent times. The Fed, on the defensive early in the reform process, looks set to emerge as the most powerful financial regulator when reforms are complete.

President Barack Obama has made a rewrite of US financial rules a top priority in the hopes of avoiding a repeat of the 2007-2009 financial crisis that shook the country.

Democrats negotiating the final Wall Street reform bill say there are relatively few differences they need to resolve between the competing bills passed by the House of Representatives and the Senate.

They aim to finish by 24 June so Obama can sign a final package into law by early July. Negotiators are seeking a way to reduce the conflicts of interest that critics say led credit-rating agencies like Moody’s Corp and Standard & Poor’s to issue the highest ratings on toxic securities.